Why the Companies Most at Risk of Disruption Are Usually the Most Successful Ones

Jeffrey Cole (0:00)

The Disruption of the Retail Business The disruption of the retail business should have come from Walmart or Target, not an upstart bookseller in Seattle. And the disruption of the taxi business, my god, was anything more ripe for disruption than taxis and are just, should have come from Yellow Cab or Hertz or Avis. Not a bunch of computer nerds in the Silicon Valley who knew nothing about transportation knew a lot about algorithms to make things happen.

SPEAKER_2 (0:37)

That was Jeffrey Cole, one of the world's leading voices on media, technology and the digital future and author of the new book, Disruptors at the Gate.

Rachel Warren (0:46)

I'm Motley Fool analyst Rachel Warren.

Jeffrey founded the World Internet Project, the longest running global study of online behavior, and has spent more than three decades advising presidential administrations, the FCC, and the Department of Defense on exactly the kinds of changes that blindside companies and investors alike. In this conversation, we get into why disruption almost never comes from where an industry is watching, what the history of AI, the Internet and Kodak all have in common, and why the executives' best position to fight disruption are almost structurally prevented from doing so. We hope you enjoy.

Welcome back to Motley Fool Conversations. I'm Motley Fool analyst Rachel Warren, and today I'm delighted to be joined by Jeffrey Cole. Jeffrey is one of the world's leading voices on media, technology, and the digital future, and has spent more than three decades tracking change and anticipating what comes next. He founded the World Internet Project. That's the longest running global study of online behavior spanning 27 years in 35 countries, and now directs the Center for the Digital Future at the USC Annenberg School. Jeffrey has advised four US presidential administrations, the FCC, Congress, and the Department of Defense, along with global government leaders. His industry clients include Microsoft, Sony, Time Warner, AT&T, CBS. He also co-founded the Global Disruption Investment Fund, and is the co-author of the upcoming book, Disruptors at the Gate, when visionaries, trailblazers, and two guys in a garage turned the world upside down. Jeffrey, so excited to have you on the show.

Jeffrey Cole (2:14)

Rachel, I'm really thrilled to be here, and thank you for such a nice introduction.

Rachel Warren (2:20)

Of course. Maybe to set the stage for our audience for your book and its core themes, tell us about what led you to write this book, but also what are the major sectors and companies that you think are most deeply exposed to structural disruption in the coming years?

Jeffrey Cole (2:35)

Well, as far as why I wrote it, I had been a television guy, and the most powerful medium ever invented when it began in the 40s, and I watched as the Internet came along.

I got a hunch this is where the World Internet Project came from, but the Internet was going to be pretty darned important. Turned out to be a lot more important than I or anyone could have predict, but I watched how people responded. The Internet was a threat to a lot of businesses. In the book, I list about 100 companies or industries that have disappeared because of the Internet, starting with the Yellow Pages, Encyclopedias, and going on. And yet, no one really understood the nature of the threat. They doubled down on their behavior, they refused to acknowledge that something was changing. Because disruption, unlike innovation, which is just a change, which may lead to increased market share, disruption is something that comes from unexpected places, turns business models upside down, changes everything.

And historically, what I call master disruptions, disruptions that lead to dozens or hundreds of other changes, the Internet being one of those, but also like the Industrial Revolution or the introduction of the automobile. That kind of disruption tends to occur about every 100, 150 years. We're living through the third massive master disruption in 25 years. Started with the Internet, COVID, the unique thing about COVID, it was the first time that everyone, everywhere at the same moment was disrupted. The way we did everything went online. I wrote a little piece during COVID asking, what would the, what would COVID, what would the pandemic have been like if there were no Internet? The answer was a lot worse. And then AI is now the third in 25 years. And we're going to already see the next one, quantum computing, coming up the driveway. So that, I got interested in this massive change and why government leaders, and we're seeing that right now with the discussion over AI, why government leaders, what business leaders, and why people rarely are able to adapt very easily. The biggest disaster and disruption is denial.